July 29, 2009

Extra: Minnesota medical company finds virtual success

As the economic downturn continues into the summer of 2009, there is a Minnesota company that is in the midst of a boom in business. Virtual Radiologic has found a niche in the medical field that is paying big dividends.

Although users of modern medicine may take the ability to see inside the body without "cutting", X-Rays as a practical device were not discovered until the 1890's. For more than a century, physicians trying to diagnose their patients' ills had to slap oversized celluloid sheets onto "light boxes" and squint at the images. The devices illuminated the black and white "photos" from behind.

Radiologist Steven Johnson, M.D. is the founder of Voyageur Radiology of Stillwater, Minnesota. He looks across his office at a wall of light boxes and old Xrays. "In the older technology, the pre-internet and pre-digital days, the images were all on sheets of film." Now, Dr. Johnson sits on the other side of the room before a computer keyboard and two large video screens.

"This is a shoulder, MRI of a shoulder," he explains staring at the image on one of the screens. He begins to dictate a report on what he sees voicing the punctuation as he goes, "Exam type. Colon. Right shoulder MRI. Period." Dr. Johnson "interprets" the MRI's (Magnetic Resonance Images) and CT's (Computed Tomography or CAT scans) by studying the images on the screens. Since the images are in a digital format, they can be transmitted virtually anywhere. "I can read my studies here in the hospital or I can read when I'm in the hospital from other sites, Duluth, Iowa, or I can read them from home."

One of the hospitals that looks to Dr. Johnson's group for Radiology service is the Saint Croix Regional Medical Center in Saint Croix Falls. The staffing, however, is only on-site during weekdays. That is not enough coverage for hospital CFO John Tremble. "The need is we need to cover that 24 hours a day, 7 days a week, which  is 8,760 hours a year. Your base physician is going to be here about 1800 hours a year and you need to have additional coverage, particularly for advanced exams, like CT scans."

The dilemma is economic as well. "A full time radiologist makes $400-500,000 a year. You'd have to have 4 more full-time radiologists, if you could find one, on staff just to cover 24 hours a day. Well, that's not possible for the rural hospitals and the rural facilities like ours to be able to do."

The cost can be crippling. As a result, many rural facilities have no radiologists on staff at all. Dr. Johnson is more than aware of the problem. "There is a rural health care shortage. I believe in radiology, very much so, and so, that's what we're trying to address."

Virtual Radiologic, from Johnson's point of view, is the answer to the staffing gap. When his Voyageur Radiology partners are off-duty, Saint Croix Regional is not left without radiological services. Instead, they have more than a hundred radiologists available through the Operations Center at Virtual Radiologic's Eden Prairie headquarters.
Operations Director Raul Ruiz keeps track of 18 staffers on duty through their busiest time, which is evenings and through the night. In other words, when radiologists who work "normal" hours go home, Virtual Radiologic takes over.

The company's bottom line is soaring in the midst of the economic downturn. Virtual Radiologic CEO Ron Kill explains how the system works. "We take images from local hospitals, over 1,000 hospitals, across the United States.  We transmit those images through secure internet connections to our data center here and then we distribute them to our radiologists who are located all across the United States. Our philosophy's very simple, we want to supplement and augment local radiological practices who serve those hospitals. Because of the shortage of radiologists and the importance of patient care, we contract with them (hospitals) and we provide services for off hours, typically nights and weekends."

There are also times during the daylight hours when multiple situations create overwhelming demand in critical situations. Then, hospitals can turn to Virtual Radiologic's doctors to maintain fast and quality radiological service. 24-7, each week, the Virtual Radiologic Operations Center takes in tens of thousands of scans from contracting hospitals, most of them small, rural medical centers. Ruiz explains, "On a nightly basis, we basically handle approximately 6800 studies."

In addition to those 1,000+ hospitals, Virtual Radiologic services more than 650 group practices, including Dr. Johnson's Voyageur Radiology.  Thus, Saint Croix Regional hires Voyageur to provide radiology services and Voyageur hires Virtual Radiologic to cover Saint Croix Regional when Voyageur's own radiologists are not available.

The Eden Prairie staff functions in the same way as Air Traffic Controllers. They take in the scans from clients over the secure lines, then distribute the CTs and MRIs to board certified radiologists around the country. Dr. Eduard Michel is one of the founders of Virtual Radiologic. He and fellow radiologist Sean Casey developed the idea for an internet-based service while working long hours at the University of Minnesota MedicaL facility. "So, we were not able to provide the service ourselves, academic centers traditionally are short-staffed and we came up with a distributed model for these radiology practices."

Michel continues as Medical Director but still "reads" scans himself at times, mainly from his Plymouth home. The concept requires that hospitals receive a report from the radiologist within about 20 minutes. Much of the business that passes through Virtual Radiologic originates in hospital emergency rooms, where speed can be crucial to a patient's survival. Earlier in the company's existence, when Dr. Casey was the CEO, a newspaper report quoted an internal memo in which Casey railed about a scan report taking too long. Reportedly, that incident resulted in some employment changes within Virtual Radiologic. The company insists they are delivering the services on time and point to meteoric growth as proof.

On one day in July, Dr. Michel allowed KARE11 to observe him working from home. One of the scans that appeared for his study involved such a case. The scan showed a skull fracture and critical bleeding on the brain. Michel dictated as he perused the scan. "New paragraph. Findings. Colon. Large right parietal epidermal hematoma measuring about 2.7 centimeters in thickness."

Realizing that the patient was in imminent danger, Michel called the hospital directly and spoke with the E.R. doctor. "He will need emergent neurosurgical consultation." At the distant hospital, the E.R. physician promised immediate action and thanked Michel, who promised to send the scan report "in the next three minutes."

CEO Ron Kill explains that demand for radiology service has simply outpaced the number of "servicers." "Imaging demand has grown very dramatically over the past many years because of advances in technology, because of the aging population as well as defensive medicine, but the supply of radiologists hasn't. Literally, Medicare reimburses medical schools and that is capped. You can't produce a radiologist in a short period of time, you know, medical school, internship and fellowship."

Although the internet is world-wide, all of the radiologists contracted with Virtual Radiologic are in the United States. Kill says Medicare and Medicaid require U.S. doctors in order to ensure payments.

Filling the gap with board-certified doctors, often working from home, coordinated by the round-the-clock staff in Eden Prairie is the goal of Virtual Radiologic. It is the successful business model of a company and seeks to extend the supply of Radiologists, even if those doctors choose to live far away from the hospitals that need their services.

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